Mitigating the effects of supply-chain tensions, high energy prices and geopolitical tensions requires strategic focus, agility and efficient execution.
Mitigating the effects of supply-chain tensions, high energy prices and geopolitical tensions requires strategic focus, agility and efficient execution.
Terming the current macro environment “highly volatile” due to geopolitical tensions, supply-chain tensions and inflation, Tata Consumer Products Limited (TCPL) MD and CEO Sunil D’Souza said that the company is looking at near-term trends to watch. closely monitoring how these economic constraints affect consumer behavior.
The company will closely monitor the global situation and inflation and take ‘practical and adequate’ mitigation measures, Mr D’Souza said in the latest annual report of the FMCG arm of the Tata Group.
Global supply-chain tensions and high energy prices had led to widespread inflation, and geopolitical tensions exacerbated the situation. He said mitigating the impact required strategic focus, agility and efficient execution.
“On a positive note, we are in the Staples business and therefore are in a relatively better position to address these momentum constraints. We have a number of initiatives in place to drive growth and build efficiencies that can enable cost optimization,” Mr. D’Souza said.
He added that these factors give the company confidence to be able to deliver profitable growth irrespective of the impact of the operating environment.
Talking about the change in consumer behaviour, Mr. D’Souza said that the level of awareness is very high. Rising disposable income, increasing urbanization and democratization of the Internet were some of the secular trends shaping the consumer landscape in India.
These trends were leading consumers to look for trusted brands with better quality and increased convenience. He added that the pandemic has further accelerated digital adoption and has also brought health and wellness ‘front and centre’ for consumers.
“While these are some secular trends that will play out over the medium to long term, we are closely monitoring near-term trends to see how inflation and other economic headwinds may affect consumer behavior,” he said.
He added that TCPL will continue to leverage the belief that the brand has inspired, expand the portfolio and increase the footprint to reach more consumers in India.
“This is a significant opportunity for us to increase our wallet share, shelf share and business share,” he added.
Currently, TCPL reaches over 201 million households in India and distributes to over 2.6 million outlets.
“We will continue to execute on our strategic priorities and accelerate our growth momentum. Innovation, supply chain optimization and digitalization will be focus areas for the year ahead. We will continue to strengthen our sales and distribution across traditional and modern channels. ” They said.
TCPL will focus on streamlining its business structure in India as well as abroad to foster further efficiencies and synergies, Mr. D’Souza said. Recently, it announced a restructuring plan to merge the Tata Coffee business with TCPL.
On the outlook, TCPL said that it will continue to see “volume-based growth in India with a favorable youth demographic profile, increasing affordability, and growing urbanization supported by increasing market share and growing share of the branded market.” The shift in preference towards premium products and consumers making conscious choices to consume reliable and healthful products will continue to play within the category, especially post-COVID.
“With increasing Internet users and increased access to social media, we are also seeing the emergence of digital-only brands with a direct-to-consumer business model,” it said.
Addressing the shareholders in the annual report, TCPL Chairman N. Chandrasekaran said the company has made “substantial progress” on strategic priorities for the business.
“Progress was made on significantly expanding our distribution, accelerating the pace of innovation, redesigning our supply network, and driving digital transformation across the value chain.
“We are investing in these capabilities for the long term and I am confident that they will drive us towards our goals,” said Mr. Chandrasekaran, who is also the chairman of Tata Sons.
According to the Tata Group chief, an exciting opportunity before the company was to understand consumer trends and leverage them to expand the portfolio and drive future growth.
There have also been several introductions to the food and beverage portfolio, addressing consumer needs around health and wellness, taste and convenience, helping to expand the total addressable market.
“We continue to invest behind all these initiatives to ensure that these will act as the growth engines for the future,” he said.